The International Monetary Fund (IMF) has announced that Ghana is expected to receive the third installment of $360 million by the end of this month, as the nation grapples with the depreciation of its cedi against the strengthening US dollar.
During its most recent press briefing on June 6, the IMF stated that its goal is to help Ghana secure Board approval for the disbursement of $360 million by the end of this month. This announcement was made by Julie Kozack, the IMF’s Director of Communication.
“Our aim is to bring the review to the IMF’s Executive Board for approval before the end of June. This would give Ghana access to $360 million in financing, bringing the total to about $1.6 billion in disbursements since May of 2023,” she indicated.
According to the Fund, Ghana’s “strong policy and reform efforts under the three-year programme are bearing fruit and signs of economic stabilisation are emerging. For example, growth in 2023 was higher than we had initially envisaged.”
The IMF also indicated that the authorities are also making good progress on their comprehensive debt restructuring. “The domestic debt exchange was completed last year, and in January 2024 the government reached an agreement in principle with its official bilateral creditors. Ghana is also engaging its external private creditors to seek their support,” the Fund stressed.
Looking ahead
Ghana is currently in dire need of dollars! Despite reaching an IMF Staff-Level Agreement nearly two months ago, the country has not yet fulfilled all the required conditions to unlock the third tranche of its IMF loan. However, sources familiar with the debt restructuring talks indicate that negotiations and agreements are nearing completion at the bilateral level.
Consequently, the ongoing monetary policy tightening in the US, coupled with Ghana’s ever-increasing import bill, has put immense pressure on the cedi, which has depreciated by more than 20% against the US dollar since the start of the year.
Looking ahead, the IMF believes “steadfast policy and reform implementation will be crucial to fully and durably restore macroeconomic stability and debt sustainability in Ghana” and that the “government has committed to continue implementing the programme as envisaged to ensure sustainable growth and support poverty reduction.”
Debt Sustainability
Recent data from the Bank of Ghana reveals that the nation’s total public debt has surged to GHS658.6 billion, nearly double the amount recorded in December 2022 prior to the implementation of the Domestic Debt Exchange Programme (DDEP).
According to the IMF, “at each review, including this one, that is in progress, the IMF does provide not only a full update of the economic situation and the macroeconomic projections, but also the debt sustainability analysis. The latest DSA will be published with the Staff Report after the Board considers the second review of the programme. And of course, also just to reiterate that it is now important for the government to continue to make progress, as it has been doing with its creditors, to ultimately restore debt sustainability for the country.”